need hwlp with step 1. please show work so i can understand how you go the answer.
5 You are a manager at ABC Inc., a manufacturing company, and must meet with top business executives and owners at the beginning of 2021 to discuss projected 2021 profitability. You currently have actual 2020 results and will present two separate scenarios (below) that would enhance production and/or effect cost or sale price for 2021. You expect to be asked about the effects of these scenarios on company profit, break-even and margin of safety as well as be able to adjust those items for any changes discussed during the meeting. Scenario #1: Lease new equipment to enhance production efficiency. This would require the use of higher quality materials but would decrease direct labor cost, allow the business to reduce the sale price and incur more sales. Scenario #2: Change direct material vendor to produce higher quality product. Sale price could increase to reflect higher quality, overall sales would decrease but so would selling costs. 6 7 8 9 10 11 12 13 14 15 scenarios above. 2. Step #1 Inputs: For each scenario, calculate the new sales and cost amounts based on the 2020 actual inputs and changes to those amounts based on the applicable scenario above. 3. Step #2 Income Projections: Complete the Contribution Margin Income Statement for 2020 and each scenario. % Change from 2020 Actual Scenario #1 Scenario #2 7% Sales in units Sales price per unit Direct labor cost per unit Direct materials cost per unit Variable overhead cost per unit Variable selling & admin per unit Fixed manufacturing costs Fixed selling & admin costs -2% -11% 5% 0% 2% 8% -14% 13% 3% 13% 1% -3% 1% -2% 1% Step #1 Inputs: 2020 Actual Scenario #1 Scenario #2 Sales in units Sales price per unit Direct labor cost per unit Direct materials cost per unit Variable overhead cost per unit Variable selling & admin per unit Fixed manufacturing costs Fixed selling & admin costs 103,500.00 80.00 15.00 18.00 5.00 7.00 1,300,000.00 950,000.00